Anti-Deficiency Laws in Arizona

A lender will auction the home in order to recover any money owed by the homeowner. In some cases, a lender may only be able to sell the property at a fraction of the cost.  The result is that the lender losses money on the sale of the property.  

For example, a homeowner has a $200,000 loan on his primary residence.  Two years later, the homeowner fails to make the payments and the lender is forced to foreclose.  When the lender sells the property, it is only able to sell it for $150,000.  This results in a $50,000 loss to the lender.

In some states across America, the lender may be entitled to receive the deficiency judgment in court and come after the home owner for the remaining balance owed.  This means that the lender could sue the home owner for $50,000 using the example above.  In Arizona, however, there are limitations to a deficiency incurred during foreclosure. If it is an investment property or an owner occupied home over 2 acres, the anti-deficiency laws will not apply.

Arizona's "anti-deficiency" statutes prevent a lender from suing a person for any losses on a home after foreclosure. As outlined in Arizona Revised Statutes, Title 33, Chapter 6.1, a person may not be sued by his or her lender if the property is located on 2.5 acres or less and is a single family residence or duplex.  This only applies if the decrease in value is not due to the home owner's neglect.